AT&T's U-Verse Gaining Customers, Leverage

AT&T has more than doubled the number of homes receiving its telco TV service in just the last three months. Known as U-verse, the service is in only a modest 126,000 homes, but that's up from some 51,000 in late July.

Overall, the company said Tuesday during a call to announce third-quarter results that it plans to eventually make the service available to up to 60% of customers within its 22-state footprint. The service competes with cable and satellite operators and allows AT&T to bundle TV service with Internet, phone and wireless access.

Separately, AT&T executives sought to put a positive spin on sales of the iPhone, a device only available to its subscribers. It announced there are 1.1 million customers--and 40% of these joined AT&T as new customers to obtain the phones.

AT&T U-verse is currently in 33 markets, the company said. Cable operators initially scoffed at the potential competition from the service and the other more widely distributed telco TV offering, Verizon's FiOS. Recently, however, they told investors these rivals represent an emerging threat in peeling off subscribers.



Comcast COO Steve Burke said last month, regarding an AT&T challenge: "They are real--they're a very big company, very serious about what they're doing, spending a lot of money."

In areas where U-verse is not available, AT&T plans to continue offering customers access to Dish Network or DirecTV in bundled sales along with its other services. Contracts, however, with those services expire later this year, raising the possibility that AT&T may sign an exclusive deal with one.

"We want to be able to offer a video alternative to customers across our base," said CFO Rick Lindner--adding that U-verse is the "preference," but agreements to offer satellite service "can fill in the rest of the footprint."

The U-verse service did experience an outage on Sunday affecting customers. Lindner called the incident "regrettable" on the conference call, saying it was due to a "software" issue and was rectified as rapidly as possible.

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